Property And Casualty Insurance License State Regulations and Ethics 3

Question 1

What is the 'grace period' in an insurance policy?

Accepted Answer

A specified time after the premium due date during which the policy remains in force even though premium has not been paid

Answer

The free look period for new policyholders

Answer

The waiting period before a new policy becomes effective

Answer

The time the insurer has to pay a claim

Question 2

What must an agent do when they have a conflict of interest with a client?

Accepted Answer

Disclose the conflict of interest to the client and obtain informed consent

Answer

Proceed with the transaction without disclosure to avoid alarming the client

Answer

Refer the client to another agent automatically

Answer

Obtain approval from the state insurance department

Question 3

What is the purpose of the 'NAIC Insurance Fraud Prevention Model Act'?

Accepted Answer

To set standards for insurer anti-fraud programs, reporting requirements, and penalties for insurance fraud

Answer

To establish penalties for consumers who file false claims

Answer

To require federal prosecution of all insurance fraud

Answer

To create a national database of fraudulent insurance companies

Question 4

What is 'premium finance' in insurance?

Accepted Answer

A loan made to the insured by a third-party premium finance company to pay the insurance premium

Answer

The insurer's investment of collected premiums

Answer

The installment payment plan offered directly by the insurer

Answer

The method by which reinsurers finance primary insurers

Question 5

Under the 'concurrent causation' doctrine, when two perils combine to cause a loss where one is covered and one is excluded, how is the loss typically treated?

Accepted Answer

The entire loss is covered because a covered peril was involved

Answer

Only the excluded peril's share of the loss is denied

Answer

The entire loss is excluded because an excluded peril was involved

Answer

Each peril's portion of the loss is calculated separately

Question 6

What is a 'surplus contribution' requirement in an insurance guaranty fund assessment?

Accepted Answer

A mandatory assessment charged to solvent admitted insurers to fund claim payments of insolvent insurers

Answer

A requirement for insurers to contribute extra capital to their own surplus

Answer

A premium surcharge added to policyholders in high-risk markets

Answer

A contribution required of agents whose clients file excessive claims